48
June (‘ Ageing populations create paradigm shift for growth ’, June 2016 ):
The average ratio of US house prices to earnings of 9.0x disguises a wide variation : Whites are close to the average at 8.7x , while Asians are below it at 7.4 But the younger Black and Hispanic populations , which are critical for driving first- time home buyer sales , have ratios of 11.6x for Blacks and 12.0x for Hispanics , based on US Census Bureau data for new home prices . Unsurprisingly , National Association of Realtors data shows the share of first-time buyers is at its lowest level since 1987 at just 32 % and has been falling for 3 years . A second key issue is the change that
%
95
85
75
65
55
45
35
25
1948
US LABOR FORCE PARTICIPATION RATE % WEALTH CREATORS 25 – 54 ; NEW OLD 55 +, 1948 – 2016
WEALTH CREATORS 25 – 54 NEW OLD 55 +
Source : pH report analysis : US Bureau of Labor statistics
1953 1958
1963 has taken place in the labour market itself , as shown in chart 11 . It was boosted in the post-War period by the rising number of Boomers entering the job market and joining the Wealth Creator 25 – 54 generation — who are critical to consumption growth . But their participation rate peaked in 2000 at 84.1 %, as the oldest Boomer reached the age of 54 . It has since declined to 81 % – equal to 1984 ’ s level , when younger Boomers were still joining the Wealth Creator generation . This decline was partly compensated by the rise in participation by the growing number of New Olders , whose rate has risen back to the 40 % level that was
1968 1973
1978 1983
1988 1993
PEAK RATE 84.1 % in 2000 TODAY ’ S RATE 81 % = 1984 LEVEL
TODAY ’ S RATE 40 % = PRE-1965 ERA
1998 2003
2008
Quality of life and sustainability
2013
▲ Chart 11 Labour force participation rates have declined in the Wealth Creator cohort and plateaued amongst New Olders are becoming ever-more important when discussing infrastructure needs
If you don ’ t know where you ’ re going , any road will do
common in the post- War period . But this growth has now plateaued , even though life expectancy has increased by a decade over the period , highlighting the urgent need for discussion of new policies that enable people to retrain for new roles in their 50s and 60s .
One further point is also relevant here , as an example of the opportunities that could be developed under President Trump ’ s proposals for a $ 1tn fund to fund infrastructure development over the next 10 years .
It is of course likely that most or all of this money will be spent on traditional projects concerned with building basic structures and promoting economic growth . But as chart 12 from Oxford Analytics ( on behalf of PwC ) shows , “ Infrastructure spending evolves with a region ’ s economic growth ”. A major , and so far largely unrecognised need , is for spending to be directed at areas relevant to today ’ s rapidly ageing population . This does not just mean healthcare facilities or sheltered housing , but it also implies a recognition that “ quality of life ” and sustainable living are becoming ever-more important .
Companies and investors could usefully take a lead here , and profit accordingly .
Concerns are mounting over China ’ s lending levels , after total social financing rose again last year , reversing the 2013 – 2015 trend , as chart 13 shows . As the IMF warned :
“ China urgently needs to tackle its corporate-debt problem before it becomes a major drag on growth ”
The position is not helped by the rising value of the US dollar , given that its foreign